| name | cash-flow-analysis |
| description | Specialized skill for analyzing company Cash Flow Statements (Statement of Cash Flows). Use when evaluating a company's cash generation (Operating Activities), capital allocation (Investing Activities), and financing health (Financing Activities). Triggers on requests involving "Cash Flow Statement", "Operating Cash Flow", "Free Cash Flow", "CapEx analysis", "Share Buybacks", "Dividend coverage", or "Cash conversion". |
Cash Flow Analysis
Overview
This skill provides a structured 5-step methodology to analyze a company's Statement of Cash Flows, enabling accurate assessment of financial health, earnings quality, and capital allocation strategy.
Analysis Workflow
Follow these steps sequentially when analyzing a cash flow statement:
1. Operating Activities Evaluation
Assess the core business's ability to generate cash.
- Look for non-cash adjustments (D&A, Stock-Based Compensation).
- Analyze Working Capital changes (Inventory, A/R, A/P).
- Reference: Use
references/analysis-framework.md (Step 1) for detailed checks.
2. Investing Activities Analysis
Determine how the company is deploying capital for future growth.
- Prioritize Capital Expenditures (CapEx) vs. M&A activity.
- Reference: Use
references/analysis-framework.md (Step 2).
3. Financing Activities Assessment
Review how the company funds itself and returns capital to investors.
- Track debt issuance/repayment and share buybacks/dividends.
- Reference: Use
references/analysis-framework.md (Step 3).
4. Quantitative Metrics Calculation
Calculate key performance indicators to benchmark against industry standards.
- Calculate Free Cash Flow (FCF): Operating Cash Flow - CapEx.
- Analyze Earnings Quality: Operating Cash Flow / Net Income.
- Reference: See
references/metrics-formulas.md for all formulas and benchmarks.
5. Synthesis & Profile Identification
Identify the company's "Cash Flow Profile" (Mature, Growth, or Struggling) and summarize findings.
- Reference: Use
references/analysis-framework.md (Step 5).
Resources
references/analysis-framework.md: Detailed step-by-step checklist for qualitative and quantitative analysis.references/metrics-formulas.md: Comprehensive list of formulas, significance, and industry benchmarks.
